Tax deduction under category 94J
This query is : Resolved
Mallika Padmanabhan
(Querist)
29 September 2010
Hi,
For information technology i.e, for software sales, now both service tax and sales tax is chargeable.
As we are charging sales tax it comes under the category of sales, is TDS is applicable for the same. Please explain.
For information technology i.e, for software sales, now both service tax and sales tax is chargeable.
As we are charging sales tax it comes under the category of sales, is TDS is applicable for the same. Please explain.
29 September 2010
If the software is a customized one as per the customer's specification, the TDS @ 10 % under section 194J will apply.
29 September 2010
But if its a ready-made packaged software... TDS will not apply.
O.D.SHARMA
(Expert)
03 October 2010
Any Material/Product with VAT bill not in TDS preview.
Mallika Padmanabhan
(Querist)
09 October 2010
I.e., any sales made for packaged software with service tax+sales tax no TDS deduction is applicable
26 July 2025
Here's a clear summary for your query about TDS under section 194J related to software sales:
* **Customized Software (developed as per client’s requirements):**
TDS @ 10% under **Section 194J (Fees for professional or technical services)** is **applicable** because it’s considered a service.
* **Ready-Made Packaged Software:**
If you are selling off-the-shelf packaged software as goods with applicable **sales tax/VAT** and **service tax**, then **no TDS deduction under Section 194J** is applicable. This is because it’s treated as sale of goods, not as a technical service.
In essence, **TDS applies only on fees for professional/technical services** (custom software development), but **not on sales of packaged software products** which are treated as goods.
* **Customized Software (developed as per client’s requirements):**
TDS @ 10% under **Section 194J (Fees for professional or technical services)** is **applicable** because it’s considered a service.
* **Ready-Made Packaged Software:**
If you are selling off-the-shelf packaged software as goods with applicable **sales tax/VAT** and **service tax**, then **no TDS deduction under Section 194J** is applicable. This is because it’s treated as sale of goods, not as a technical service.
In essence, **TDS applies only on fees for professional/technical services** (custom software development), but **not on sales of packaged software products** which are treated as goods.
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